Summary
Tariffs are creating a difficult operating environment. Policies change quickly, supply chains are being reviewed, and businesses are running more scenarios than their teams can reasonably manage. In this episode of The Pricing Guys, Michael and Avy discuss whether stopping forecasts is a sensible pause—or a costly way to avoid making decisions.
Key takeaways
- Stopping forecasts does not remove the risk. It only makes the business less prepared to respond.
- Companies should plan around a realistic downside case instead of reacting to every policy change.
- Pricing is often the fastest lever to pull when tariff-related costs are expected.
- Tariff surcharges may be easy to administer, but building lasting cost changes into the base price is usually stronger.
- Better pricing decisions can reduce scenario fatigue and give teams room to focus on running the business.
The problem with stopping forecasts
When the business environment changes every few days, forecasting can start to feel pointless. Tariffs may be announced, delayed, adjusted, or removed. A supply chain plan that made sense on Monday can look outdated by Friday.
That uncertainty is pushing some companies to stop forecasting altogether. On the surface, this may seem practical. Teams can stop spending time on endless scenarios and return their attention to day-to-day operations.
But there are two very different reasons a company might stop forecasting:
- Avoidance: leadership does not know what to do, so it chooses to wait and hope conditions improve.
- Prioritization: the organization accepts that short-term forecasts will keep changing and focuses on a clear operating plan.
The second approach can work. The first can quickly become expensive. The risk has not disappeared because a forecast has been paused. Costs can still rise, inventory can still be delayed, and competitors can still move first.
At Revenue Management Labs, forecasting works best when it supports a decision. The goal is not to produce dozens of disconnected models. It is to identify the assumptions that matter, understand the likely outcomes, and help leaders act with enough confidence.
Plan for a credible downside case
Businesses do not need to predict every possible tariff outcome. That is an impossible standard, and it creates scenario fatigue across finance, procurement, operations, and commercial teams.
A more useful approach is to define a credible downside case. For example, a company might assume that tariffs will affect a major production market within the next 90 days. It can then ask:
- Which inventory should be moved before the change takes effect?
- Where can future supply come from?
- How much capacity is available in alternative locations?
- Which products, customers, or markets carry the greatest margin risk?
- What price action would protect the business without damaging demand?
This does not mean blindly acting on the worst possible outcome. It means preparing for a serious and plausible one. If the situation improves, the organization can adjust. If it worsens, the company is not starting from zero.
Supply chain changes often take months. New suppliers must be qualified, production must be moved, and logistics capacity must be secured. Waiting for complete certainty can mean waiting until the available options are gone.
Pricing is the quickest lever
Supply chain decisions are important, but they are not always fast. Pricing can often be changed sooner, which makes it one of the most practical responses to tariff pressure.
A company expecting higher landed costs should not wait 90 days to begin reviewing prices. It should understand the exposure now and decide how much of the expected impact needs to be reflected in the market.
The strongest response is not always a broad, across-the-board increase. A customized pricing review should consider:
- Product and customer profitability
- Competitive position
- Contract terms and renewal dates
- Customer willingness to pay
- The size and timing of the cost change
- Margin targets by segment
Revenue Management Labs combines pricing expertise with AI embedded in custom models to help identify these patterns faster. The technology supports analysis; it does not replace commercial judgment. The final recommendation still needs to fit the company’s industry, data, customers, and ability to execute.
The key is to move early and avoid constantly moving prices up and down. Frequent price changes create administrative work, confuse customers, and make it harder for sales teams to defend the decision.
Why tariff surcharges can create problems
A surcharge may appear to be the simplest answer. The company can calculate the estimated tariff impact and add a separate fee to each invoice. This creates flexibility if the tariff changes again.
The problem is that a surcharge also invites questions. Customers may challenge the fee, compare it with a competitor, or expect it to disappear when the immediate disruption passes. Over time, the surcharge can become a permanent source of friction.
For structural cost changes, incorporating the impact into the core price of the product or service is often more effective. It presents the price as a reflection of the overall value and cost of the offering, rather than as a temporary charge attached to a bill.
| Approach | Short-term benefit | Long-term risk |
|---|---|---|
| Separate tariff surcharge | Easy to administer and adjust | Creates customer friction and invites negotiation |
| Base price adjustment | More stable customer communication | Requires stronger analysis and implementation |
| No price action | Avoids immediate pushback | Margin erosion and limited room to respond later |
There may be situations where a surcharge is appropriate, especially when costs are genuinely temporary or contract terms require a separate adjustment. But it should be a deliberate decision, not an automatic shortcut.
Use pricing to create operating room
Getting ahead of tariff-related pricing does more than protect margin. It can create a cushion that gives the organization time to work through broader changes.
With more margin protection in place, teams may spend less time running endless cost scenarios and more time on customer value, supply planning, and execution. This is the practical balance businesses need in uncertain markets: keep watching the environment, but do not let uncertainty stop the business from operating.
Forecasting in chaos is not about predicting the future perfectly. It is about choosing a sensible range, preparing for the risks that could materially affect performance, and taking action before every decision becomes urgent.
That is where a hands-on pricing partner can help. Revenue Management Labs connects analysis, customized strategy, and implementation so pricing recommendations can move from the boardroom into the field—and stay there.
